Gary Gordon of the ETF Expert states that the sector still remains weak because of the ongoing issues with the credit crisis, toxic assets, TARP, residential and commercial real estate defaults, foreclosures and subprime, just to name a few. (More on the challenges faced by financials).

Banks continue to fail in record numbers.  To prevent this from happening again, regulators are pushing for tougher changes in U.S. financial regulations, as the Senate’s top banking legislator on Tuesday proposed a new super-cop to police banks, a systemic risk agency and strong consumer protections, reports Kevin Drawbaugh of Reuters. At the end of the day, this new policy would create a single bank regulator and eliminate two. (More on financials).

Only time will tell if the proposed regulation passes and the sector benefits, but as of now, some think financials are weak.  The SPDR Select Sector Fund Financial (NYSEArca: XLF) is up 19.4%  year-to-date.

If you’re itching to play in the sector, mind the trend lines and have your strategy in place in case hiccups hit the funds. (How to follow trends).

For more stories on financials, visit our financial category.

Kevin Grewal contributed to this article.

On the one hand, unemployment rates remain elevated, companies continue to implement lean measures and overall consumer confidence is down. On the other hand, the largest four investment banks have earned $22.6 billion so far for this year, recovering much faster than anyone had envisioned they would. (More on banks).

Two reasons behind Wall Street’s success this year are the demise of several firms, leaving only the fittest around, and low interest rates, which makes borrowing relatively cheap, states Walter Hamilton of The Los Angeles Times.

How can you go about dusting yourself off and rebuilding your portfolio? Here are six strategies you can use. While you’re thinking about the rebuilding process, it’s also important to evaluate your past and figure out where you went wrong and where you went right. Here are 10 tips for becoming a better investor.

As a result of the recent uptrend seen on the Street, one can capitalize by investing in some of the firms that are showing renewed vigor.  The SPDR KBW Capital Markets (NYSEArca: KCE) is one such tool. KCE focuses its holdings on some these investment banks and is up 45.2% year-to-date. (More on financials).

For more stories on strategy, visit our trend following category.

Kevin Grewal contributed to this article.

Let’s start with the bad news.

Commercial real estate loan failures in the mid-sized regional banking industry have become a thorn in the economy’s foot, writes Andrew Smith for Newsday. According to a Wall Street rating agency’s report, commercial real estate failures will likely affect smaller banks because most of these banks have a larger portion of their portfolios allotted to commercial real estate loans. (Why regional banks are faltering).

Non-performing loans are on the increase and the Fitch report noted that commercial mortgage defaults are accelerating, which has been evidenced by the quarterly reports of many banks.

On the bright side, regional banks could become more dominant in the United States as policymakers reassess risk in the financial system and enact more strict regulations, reports  Karey Wutkowski for Reuters. The notions of “too-big-to-fail” and “systemic risk” may change the country’s banking model to accommodate more mid-sized banks, says Denis Salamone, chief operating officer of Hudson City Bancorp.

For more information on regional banks, visit our regional banks category.

• SPDR KBW Regional Bank ETF (NYSEArca: KRE): down 26% year-to-date

• Regional Bank HOLDRs (NYSEArca: RKH): up 5.9% year-to-date

Max Chen contributed to this article.

]]> http://www.etftrends.com/2009/11/regional-bank-etfs-the-bad-and-the-good.html/feed/ 0 http://www.etftrends.com/2009/11/midday-market-update-consumer-prices-up-while-housing-numbers-down.html http://www.etftrends.com/2009/11/midday-market-update-consumer-prices-up-while-housing-numbers-down.html#comments Wed, 18 Nov 2009 18:00:26 +0000 Tom Lydon http://www.etftrends.com/?p=21004 Stocks and exchange-traded funds (ETFs) have been in negative territory from the opening bell this morning on the back of higher inflation at the consumer level and weak numbers on housing.

Equities slid on Wednesday morning as an unexpected drop in home construction raised concerns about the pace of the economy’s recovery, say Stephen Bernard and Tim Paradis for the Associated Press. The U.S. Commerce Department reported that the construction of homes and apartments as well as building permits, a key gauge of future activity, fell well short of expectations held by economists. The puts into question Wall Street’s belief in a V-shaped recovery. iShares Dow Jones U.S. Home Construction Index (NYSEArca: ITB) is trading flat this morning.

Inflation figures were also a bit of a surprise to the markets. U.S. inflation accelerated in October as energy prices rose again and car prices rose at the fastest pace since the early 1980s, reports Rex Nutting for MarketWatch. The consumer price index (CPI) rose a seasonally adjusted 0.3% in October, while the core CPI rate, which excludes food and energy, rose by 0.2%.

Meanwhile, gold hit another fresh record high – near $1150 an ounce – in trading today. Another dip in the value of the U.S. dollar added to momentum buying as prices broke through key technical resistance levels, says Jan Harvey for Reuters. The gold market is being underpinned by fresh interest in gold from central banks after a recent major bullion purchase from India and smaller purchases by the central banks of Sri Lanka and Mauritius. The SPDR Gold Shares Trust ETF (NYSE: GLD) is currently trading up by a half percent at $112.50 a share. (For more stories on gold, see our gold category).

In an interesting development, Goldman Sachs (NYSE: GS) is attempting to spruce up their image and generate some goodwill in this holiday season. Goldman is trying a new tack to improve its public image, writes Graham Bowley for The New York Times. The company is apologizing for past mistakes and sharing some of its riches. It will spend $500 million to help thousands of small businesses recover from the recession. (For more stories on the financial sector, visit our financial category).

Tony D’Altorio contributed to this article.

The Labor Department reported that new claims for unemployment fell to the lowest number since Jan. 3. The figure was also below what economists had reported.

Wal-Mart (NYSE: WMT) reported that its profit were up 3.2%, although sales at stores open for at least one year were down slightly as economic conditions remained challenged. Wal-Mart has been a standout in the recession, thanks to being considered a low-price leader. The store attributed the drop in sales solely to falling prices, reports Stephanie Rosenbloom for The New York Times. Consumer Staples Select Sector SPDR (NYSEArca: XLP) was down slightly this morning; Wal-Mart is 10%. For more stories on consumer activity, visit our retail category.

Intel (Nasdaq: INTC) has been ordered to pay $1.25 billion as part of a settlement in an antritrust and patent case. Advanced Micro Devices had charged Intel with using strong-arm tactics to pressure PC and server makers to use its processors. In return for the settlement, AMD would withdraw its complaints, say Vindu Goel and James Kanter for The New York Times. iShares Dow Jones U.S. Technology (NYSEArca: IYW) is trading slightly lower this morning; Intel is 6%.

Treasury Secretary Timothy Geithner told Asian nations this morning that the Obama administration was committed to having a strong dollar. The dollar has recently hit a 15-month low on soaring budget deficits, reports Reuters.

The FDIC has ordered banks to prepay $45 billion in order to rebuild its deposit fund. The enormous rate of bank failures this year has drained the coffers, says Alison Vekshin for Bloomberg. The failures have led to a deficit in the fund for the first time since 1991.

For more stories on banks, visit our financial category.

In the third quarter, median home prices declined across the nation. One out of every 10 cities saw declines, and sales of distressed properties accounted for 30% of all sales, reports J.W. Elphinstone for the Associated Press. On the plus side, home sales continued to climb. Third-quarter sales were an improvement over both the second quarter and last year’s.

• MacroShares Housing Up (NYSEArca: UMM): down 8.6% in the last month

Sen. Chris Dodd introduced a financial overhaul bill this morning, which seeks greater changes than any envisioned by the White House or the House of Representatives. The 1,100-page draft would create an agency charged with identifying and removing systemic risks to the economy and consolidate bank regulation under a single regulator, report Michael R. Crittenden and Jessica Holzer for The Wall Street Journal.

• Financial Select Sector SPDR (NYSEArca: XLF): up 20.5% year-to-date

Treasuries are rising ahead of a $25 billion auction this week of 10-year notes. Analysts say the auction could be challenging. One analyst noted that recent economic indicators, including the jobs report last week, should support bond prices, says Ben Rooney for CNNMoney.

• iShares Barclays 7-10 Year Treasury (NYSEArca: IEF): down 4.6% year-to-date

There have already been 41 announced U.S. deals worth an estimated $47.5 billion in November.  Those who stand to benefit from this trend are large Wall Street banks and some boutique financial firms, states Jessica Papini of The Wall Street Journal.

An increase to access to capital markets is what most think is driving the pickup in the M&A market. The industry suffered over the past year as a result of the financial crisis and the inability of firms to access the capital markets. (Click here for more on capital markets).

For more stories on financials, visit our financial category.

There will soon be two ETFs to play activity in corporate mergers and acquisitions.

IndexIQ will soon be launching the IQ ARB Merger Arbitrage ETF (NYSEArca: MNA), which tracks a basket of companies with publicly announced takeovers, says Benzinga. Merger arbitrage is purchasing stocks of targets for takeover for less than what the transaction price will be, then theoretically pocketing the difference.

This rebound in M&A could also benefit the SPDR KBW Capital Markets ETF (NYSEArca: KCE), which is up 40.7% year-to-date.  KCE holds stocks that stand to benefit from an increase in M&A activity, such as Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS); GS is 9.9% and MS is 8.1%.

Kevin Grewal contributed to this article.

The 10.2% unemployment figure is far worse than what economists had expected, and they don’t see any sign of relief until next year. While the pace of layoffs has slowed, the unemployment rate is continuing to climb, reports Javier C. Hernandez for The New York Times.

Unemployment isn’t just as issue here, either; millions around the world don’t expect to see relief in the form of jobs anytime soon. The European Union forecast unemployment in the eurozone to rise to 10.7% in 2010, up from 9.5% this year. Unemployment ranges from 3.5% in the Netherlands to 18.3% in Spain, reports Greg Keller for the Associated Press. In China, the official urban unemployment rate is 4.3% in the third quarter. Brazil’s unemployment was 8.1% in August, almost unchanged from the previous month.

Gold futures have soared to a record $1,100 an ounce today. While some profit-taking briefly sent gold lower, it resumed its course and analysts expect it to continue to move higher, reports Allen Sykora for The Wall Street Journal. SPDR Gold Shares (NYSEArca: GLD) is up about 0.4% year-to-date. (More on gold can be found here).

Businesses slashed inventories for a record 13th straight month in September, although sales rose for the sixth consecutive time. Many hope that improving sales figures will encourage businesses to start lifting production, although a rising jobless rate heightens fears that consumers won’t start spending anytime soon, reports Martin Crutsinger for the Associated Press. (An ETF to play holiday shopping).

The world’s largest insurer, AIG (NYSE: AIG) reported that it was profitable for the second consecutive quarter. Although things have stabilized, the company’s CEO said that earnings will remain choppy while they restructure.  SPDR KBW Insurance (NYSEArca: KIE) is up about 0.6% this morning.

G20 Finance Ministers are meeting this week to discuss financial reform and economic recovery. While these economies have put in place certain policies in order to push along a recovery, they’re not policies anyone wants to keep in place forever. The general consensus is that it’s too soon to reverse the measures, but it’s not too soon to begin talking about when and how it would happen. Government debt in developed G20 countries is likely to reach 118% of annual national income in 2014, reports Andrew Walker for the BBC.

For more stories on the global economy, visit our global ETF page.

September pending home sales jumped 6.1% as homebuyers rushed to take advantage of a government tax credit. The $8,000 credit for first-time homebuyers ends at the end of this month. The number of sales of previously owned homes are now at their highest level in more than two years, reports Alan Zibel for the Associated Press. (More stories on the real estate sector).

• iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)

U.S. manufacturing activity grew at its fastest rate in more than three years in October. The surge was unexpected, although some noted that it’s still improving at a modest pace, reports The Wall Street Journal. Construction spending also rose by 0.8%, although Wall Street expected a decline.

• Industrial Select Sector SPDR (NYSEArca: XLI)

CIT filed for bankruptcy this weekend in a last-ditch effort to keep operating. CIT is a lender to nearly a million small- and mid-size businesses. The lender was also a recipient of $2.3 billion in taxpayer bailout money, which will be wiped out in the bankruptcy, The Wall Street Journal notes. (How to harness the financial sector’s recovery).

Ford surprised Wall Street by announcing $1 billion in net income in the third quarter. The automaker has also forecast a “solidly profitable” 2011. Ford hasn’t posted a full-year profit since 2005, report Tom Krisher and Dee-Ann Durbin for the Associated Press.

Investors this week will be looking at various economic indicators for clues to the strength of the U.S. economy. One of the most anticipated reports is the Labor Department’s October employment report, which is due on Friday. The Federal Reserve is also going to comment on Wednesday after a two-day meeting.

Oil had been above $80 a barrel for much of the morning, but dropped back below that mark as the dollar continued to gain against the euro, report Donna Kardos Yesalavish and Geoffrey Rogow for The Wall Street Journal. PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) is up about 0.5% this morning. (Read our currency report for more on currencies and ETFs).

The market’s dip is also being attributed to analyst downgrades of banks and concerns that Bank of America (NYSE: BAC) will have to sell shares in order to payback bailout money it received from the government, reports Rita Nazareth for Bloomberg. The Financial Select Sector SPDR (NYSEArca: XLF) is down more than 2% this morning.

Verizon Communication (NYSE: VZ) reported this morning that its third-quarter profit fell less than expected, by 9%. Gains in the company’s wireless division helped offset slower-than-expected growth in its FiOS television service, says Sinead Carew for Reuters. Vanguard Telecom Services (NYSEArca: VOX) is down more than 2.5% this morning; Verizon is 20.3%.

For more stories on telecommunications, visit our telecommunications page.